La Lettre du GERPISA no 118 (decembre 1997)

Editorial - Michel Freyssenet

Putting an End to Costly Thinking

What do problems at Mercedes, financial difficulties in emerging industrial countries, and massive layoffs announced by General Motors all have in common ? Nothing, at first glance, apart from the fact that in all three cases, a great number of actors, analysts, and researchers had recently declared that Mercedes would necessarily succeed as it increased its line of products, that emerging industrial nations could only experience a continued development of their domestic markets as they progressively opened up to free market mechanisms, and finally that GM's financial recovery of the past few years represented a profound transformation. Extrapolating from recent tendencies, however, has proven to be difficult, especially since the entire history of the automobile industry, including those fruitful years between 1945 and 1975 that some countries experienced, calls for a constant analysis of changes in external and internal conditions which determine a firm's performance as well as lack of performance.

An ordinary road test on a new model carried out by specialized journalists was all it took to reveal the extent of dysfuntionning which surrounded the conception of the new model, as well as internal tensions emanating from newly-adopted orientations. Indeed, as we declared following our first international research program, it is difficult to simultaneously be Einstein and Carl Lewis. It requires competence, and often a contradictory set of means and dispositions. Undoubtedly, it is very difficult for a firm to pursue two separate and different profit strategies : indeed, in the Mercedes case, a "specialization and quality" strategy as well as an "innovation and flexibility" strategy.

The lack of confidence on the part of some investors and international lenders in the capacity of certain emerging industrial nations to honor their debts was all it took to reveal the underpinnings, and thus fragility, of different growth patterns within these countries. Indeed, history has taught us that the development of automobile markets and equipment has only been possible thanks to a moderately hierarchized redistribution of national revenue, accompanied by a relatively continual and regular growth rate.A large number of "emerging countries" obviously do not belong to this category, and automobile constructors should take this into consideration. Finally, a new change in the dollar/yen relationship was all it took to force GM to proceed with another massive layoff program. However, this monetary event only served to accelerate a decision which was already part of a worldwide GM strategy adopted several years ago. Global commonalization of its models'platforms can only dramatically diminish its production diversity, thus the number of workers, in the absence of a competitive edge that GM has not yet reacquired.This commonalization remains to be accomplished. The tension it provoked at Opel, GM's German branch, demonstrates that it is not an ordinary means of achieving economies of scale, rather, that it is a challenge for there composition of global economics and politics as well as the accompanying evolution of automobile users' diverse demands.

As with preceding conferences, GERPISA's sixth international encounter will seek to avoid a universalizing approach and analysis. It will attempt to identify conditions for the viability of new emerging areas and automobile industry firms' different internationalization strategies. This year, the conference will focus on the theme "New Emerging Areas", be they countries or regional groups, and plenary sessions will be devoted to them. Other themes will be discussed in the workshops. You are all invited to submit proposals before January 31 1998, and may find a call for papers enclosed in this newsletter, as well an invitation your University or other institution might request for any financial aid to participate in the conference.

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